Alaska Gas Pipeline

The Alaskan Natural Gas Pipeline is a proposal to transport natural gas from the Alaska North Slope natural gas reserves to the U.S. Midwest. There are two competing projects: one by BP and ConocoPhillips, and another by TransCanada Corp.cite news
publisher=Upstream Online
url=http://www.upstreamonline.com/live/article156658.ece
title= Gazprom reveals Alaska pipe dream
date=2008-06-09
accessdate=2008-06-14] cite news
publisher=The Anchorage Daily News
url=http://www.adn.com/money/industries/oil/pipeline/story/255462.html
title= Palin picks Canadian company for gas line
author= Weley Loy
date=2008-01-04
accessdate=2008-06-14] TransCanada has secured state seed money and a license from the state of Alaska to build and operate a pipeline, but does not yet have federal approvals needed to start construction.

History

Initial evaluations

Large natural gas reserves were discovered in Prudhoe Bay in 1967. Talk of a pipeline peaked during the 1973 OPEC oil embargo and several companies came out in favor of large pipeline projects. Canadian Arctic Gas Pipeline, Ltd.—a consortium of large oil companies including Shell, Exxon, and TransCanada—proposed a route from Alaska's Prudhoe Bay across northern Yukon to the Mackenzie Delta, and then south through the Mackenzie Valley to Alberta. In addition, the Foothills Pipeline consortium pursued a competing Mackenzie Valley Pipeline, starting at the Mackenzie Delta and also running along the river valley to Alberta. Either proposal required the approval of the Canadian government, which named Thomas Berger to lead an inquiry into the proposals. Berger's inquiry resulted in a recommendation for a ten year moratorium on development of the pipeline to deal with issues such as Aboriginal land claims and setting aside of conservation areas.

In the United States, three competing applications were filed with the Federal Power Commission to construct a natural gas pipeline from Prudhoe Bay. A proposal sponsored by El Paso Corporation routed the pipeline to Valdez along the oil pipeline route with LNG tankers then transporting the gas to terminals on the west coast. The other two proposals would cross Canada on a route parallel to the Alaska Highway. The Federal Power Commission conducted lengthy hearings on the relative merits of the three plans, and under the Natural Gas Act [UnitedStatesCode|15|717] the Commission had the legal right to select the final route. Following the 1976 elections where John McMillian, CEO of Northwest Pipeline was a major supporter of Jimmy Carter, President Carter proposed special legislation to transfer the task of selecting a project from the Federal Power Commission to the President. Congress adopted the Alaska Natural Gas Transportation Act of 1977, [UnitedStatesCode|15|719] and Carter selected the project sponsored by Northwest to the exclusion of the other two projects. The Commission then proceeded to conduct further proceedings to issue certificates of public convenience and necessity to authorize construction of pipelines from Prudhoe Bay and extending to San Francisco and Chicago, and the United States and Canada entered into an agreement regarding having the gas pipeline follow the Alaskan Highway route.

Ultimately, Northwest's consortium could not finance the project, and instead decided to "prebuild" the segments from Alberta to San Francisco and Chicago. Northwest justified the prebuild on the theory that using Canadian gas to depreciate the pipeline for a period of years would make the transportation of Alaskan gas more economic at a later date. The prebuild system went into service under the names Pacific Gas Transmission and Northern Border Pipeline. Subsequently, an affiliate of TransCanada Pipeline acquired Pacific Gas Transmission and 50% of Northern Border. Northwest was acquired by the Williams Companies . As a result, Northwest was no longer willing to pursue the full project to Prudhoe Bay.

All-Alaskan Pipeline

Former Secretary of Interior Wally Hickel headed a consortium which sought to revive the El Paso proposal to construct an 800-mile gas pipeline along the oil pipeline route from Prudhoe Bay to Valdez (with a branch to Anchorage), because such a route would also serve Anchorage and Fairbanks and would have a much lower construction cost than the overland pipeline routes. The remaining gas would be exported as LNG. Competitors argued that this proposal was barred by the 1977 statute and President Carter's decision. The consortium argued that because the pipeline would be used for intrastate commerce and foreign commerce, but not for interstate commerce, the project would not require Federal approvals under the Natural Gas Act. Three Alaskan boroughs voted to form the Alaskan Gasline Port Authority (AGPA) to promote this project under Alaska Code § 29.35.600. [North Slope Borough: 1,837 Yes / 471 No, Fairbanks North Star Borough: 10,760 Yes / 3,629 No, City of Valdez: 1037 Yes / 256 No. http://www.allalaskagasline.com/pages/project.dev.basis.php]

Following Alaska's decision to contribute $500 million to fund startup costs of an overland route, the AGPA is now advocating a "Y" route which would first go to Valdez and later build a second fork toward Canada. [http://www.allalaskagasline.com/documents/2008/2008-06-19_AGPA_Press_Release_re_Mitsubishi_Corp.pdf Retrieved 2008-09-15.]

Alaska Gasline Inducement Act

On 3 July 2007, the Governor of Alaska Sarah Palin announced that the State of Alaska was ready to receive applications to build a pipeline within the framework of the Alaska Gasline Inducement Act (AGIA).cite news
url = http://www.cbc.ca/canada/north/story/2007/07/04/north-slope.html
title = Alaska seeks bids for North Slope gas pipeline
publisher = CBC News
date = 2007-07-04
accessdate = 2008-06-14] On 4 January 2008, a proposal by TransCanada was selected. Four other proposals were submitted: By Sinopec, AEnergia, the AGPA, which proposed a liquefied natural gas project, and the Alaska Natural Gas Development Authority.

On January 5, 2008, Palin announced that the Canadian company TransCanada Corp., was the sole AGIA-compliant applicant. [cite web|url=http://www.adn.com/money/industries/oil/pipeline/story/255462.html |title=Palin picks Canadian company for gas line: Gas Pipeline|publisher=adn.com|date= |accessdate=2008-08-29] [cite web|url=http://www.ktuu.com/Global/story.asp?S=7578924 |title=Canadian company meets AGIA requirements|publisher=ktuu.com|accessdate=2008-08-29] On August 27, 2008, Palin signed a bill into law giving the state of Alaska authority to award TransCanada Corp. $500 million dollars in seed money and a license to build and operate the $26-billion pipeline to transport natural gas from the North Slope to the Lower 48, through Canada. [Rosen, Yereth. [http://www.canada.com/calgaryherald/news/story.html?id=2e84b1e8-9a4a-4558-ad05-21b517c50fae “Alaska governor signs natgas pipeline license bill”] , "Calgary Herald", (2008-08-27.] [cite news
url=http://www.bloomberg.com/apps/news?pid=20601082&refer=Canada&sid=acNe2vW46POk
title=TransCanada Gets Alaska Governor Palin's Approval for Pipeline
first=Edward
last=Gismatullin
work=Bloomburg.com
date=2008-08-29
accessdate=2008-09-16]

The license is not a construction contract, and federal energy regulators must approve the project before it can go forward. [ [http://www.adn.com/sarah-palin/story/515517.html "Some of Palin's remarks stretch the truth: Gas pipeline, earmark issues have more subtlety than described"] , "Anchorage Daily News", September 4, 2008]

ConocoPhillips proposal

Outside of the AGIA process, authorities were evaluating a separate proposal issued by ConocoPhillips.cite news
publisher=Upstream Online
url=http://www.upstreamonline.com/live/article146681.ece
title= Palin nod boosts TransCanada pipe plan
date=2008-01-04
accessdate=2008-06-14] On 9 April 2008, BP and ConocoPhillips announced that they would develop a joint pipeline project.cite news
publisher=WTOP
url=http://www.wtopnews.com/?nid=111&sid=1324271
title= Alaska Now Has 2 Gas Pipeline Proposals
author= Steve Quinn
date=2008-04-09
accessdate=2008-06-14]

Route

Possible routes include the Alaska route, or southern route, a pipeline along the Alaska Highway. A shorter alternative route, which was considered in 1970s, links Prudhoe Bay natural gas through Mackenzie River Valley. The pipeline will be built only if Canadian authorities can strike a deal with First Nations whose lands are in the pipeline route, who are accusing Palin and other pipeline proponents of treating them with disrespect by not consulting with them. [cite web |url=http://www.newsweek.com/id/160088 |title=Palin's Pipeline to Nowhere | Newsweek Periscope | Newsweek.com |format= |work= |accessdate=2009-09-23]

Competing projects

The pipeline proposed by TransCanada would run convert|1715|mi|km|-1 from the North Slope to Calgary in Alberta. It is expected to cost US$26 billion and to be operational by 2018.

The project developed by Denali – The Alaska Gas Pipeline LLC, a joint venture of BP and ConocoPhillips, foresees a pipeline with a capacity of 41 billion cubic meter (bcm) of natural gas per annum down the Alaska Highway across Alaska, through the Yukon and British Columbia into Alberta.cite news
publisher=Upstream Online
url=http://www.upstreamonline.com/live/article145188.ece
title= ConocoPhillips lays Alaska pipe plans
date=2007-11-30
accessdate=2008-06-14] It also consists of a gas treatment plant on North Slope. The project is estimated to cost US$32 billion and to be ready by 2018. It is possible that in the second stage an additional convert|1500|mi|km|-2 pipeline from Alberta to Chicago in the United States would be built as an alternative to the existing Northern Border Pipeline. ExxonMobil is invited to participate in the pipeline project.cite news
publisher=New York Times
url=http://www.nytimes.com/2008/04/09/business/worldbusiness/09pipeline.html?_r=1&oref=slogin
title= 2 Oil Firms Plan Alaska Gas Pipeline
author= Jad Mouawad; Clifford Krauss
date=2008-04-09
accessdate=2008-06-14] Also Enbridge, Royal Dutch Shell and Gazprom have shown an interest to join this project.cite news
publisher=Upstream Online
url=http://www.upstreamonline.com/live/article154144.ece
title= Enbridge eyes Alaska pipeline
date=2008-05-07
accessdate=2008-06-14] cite news
publisher=Downstream Today
url=http://www.downstreamtoday.com/News/Articles/200804/Enbridge_Shell_Express_Interest_In_Dena_10033.aspx
title= Enbridge, Shell Express Interest In Denali
author = Tom Fowler
date=2008-04-10
accessdate=2008-06-14]

Politics

Opposition to the Alaska natural gas pipeline route mandate and price supports are coming from both the Bush administration and the Canadian government. In a letter to the Sen. Domenici, Secretary of Energy Spencer Abraham wrote, " [The administration] believes market forces should select the route of the pipeline.” He continued, “The administration strongly opposes the price-floor tax credit provision in the Senate energy bill and any similar provisions." However strong the administration’s objections, Secretary Abraham suggested several non-price support tax provisions that could subsidize the construction of the pipeline. Former Canadian Ambassador to the United States Michael Kergin wrote, "Canada is of the opinion that the Alaskan pipeline should be built without subsidies and without the route being determined by legislation."Fact|date=September 2008

Former Governor Wally Hickel has advocated an "All-Alaskan" route which would go from Prudhoe Bay to Valdez and would bring gas to Fairbanks and Anchorage. He opposes the award of the route to TransCanada which would not result in gas service for Alaska's population centers. [cite news
url=http://www.adn.com/opinion/story/443269.html
accessdate=2008-09-15
date=2008-06-21
title=Sensible solution is for Alaska to build the gas pipeline
first=Wally
last=Hickel
work= Anchorage Daily News]

ee also

*Trans-Alaska Pipeline System

References

External links

* [http://gov.state.ak.us/agia/ State of Alaska - AGIA website]
* [http://www.denali-thealaskagaspipeline.com/ BP's and ConocoPhillips' project website]
* [http://www.transcanada.com/company/alaska_pipeline_project.html TransCanada Pipelines' project website]
* [http://www.allalaskagasline.com/ Alaska Gasline Port Authority website]